Tax rates for business individuals, AOPs during TY2023

Tax rates for business individuals, AOPs during TY2023

ISLAMABAD: Finance Bill, 2022 has proposed to revise tax rates for business individuals and Association of Persons (AOPs) during Tax year 2023.

The government presented its federal budget 2022/2023 and introduced various changes to taxation laws to ensure documentation and plug revenue leakages.

READ MORE: Pakistan reintroduces advance tax on foreign payments

Through Finance Bill, 2022 the basic exemption of tax on income of individuals and AOPs has been increased to Rs600,000 from Rs400,000.

Following is the proposed tax card for business individuals and AOPs.

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Sr. No.Taxable IncomeRate of Tax
1.Where taxable income does not exceed Rs. 600,000/0 per cent
2.Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 800,0005 per cent of the amount exceeding Rs. 600,000
3.Where taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000Rs. 10,000 + 12.5 per cent of the amount exceeding Rs. 800,000
4.Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000Rs.60,000 + 17.5 per cent of the amount exceeding Rs. 1,200,000
5.Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000Rs. 270,000 + 22.5 per cent of the amount exceeding Rs. 2,400,000
6.Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000Rs. 405,000 + 27.5 per cent of the amount exceeding Rs. 3,000,000
7.Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000Rs. 680,000 + 32.5 per cent of the amount exceeding Rs. 4,000,000
8.Where taxable income exceeds Rs. 6,000,000Rs. 1,330,000 + 35 per cent of the amount exceeding Rs. 6,000,000.”

Following are the existing rates of tax for Individuals and Association of Persons for tax year 2022:

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(1) Subject to clause (2), the rates of tax imposed on the income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:—

1. Where taxable income does not exceed Rs. 400,000: the tax rate shall be zero per cent.

2. Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,000: the tax rate shall be 5 per cent of the amount exceeding Rs. 400,000.

3. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: the tax rate shall be Rs. 10,000 plus 10 per cent of the amount exceeding Rs. 600,000.

4. Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000: the tax rate shall be Rs. 70,000 plus 15 per cent of the amount exceeding Rs. 1,200,000.

READ MORE: New ADR mechanism introduced to facilitate taxpayers

5. Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000: the tax rate shall be Rs. 250,000 plus 20 per cent of the amount exceeding Rs. 2,400,000.

6. Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000: the tax rate shall be Rs. 370,000 plus 25 per cent of the amount exceeding Rs. 3,000,000.

7. Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000: the tax rate shall be Rs. 620,000 plus 30 per cent of the amount exceeding Rs. 4,000,000.

8. Where taxable income exceeds Rs. 6,000,000: the tax rate shall be Rs. 1,220,000 plus 35 per cent of the amount exceeding Rs. 6,000,000.

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